Correlation Between Caterpillar and CMCSA

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Can any of the company-specific risk be diversified away by investing in both Caterpillar and CMCSA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Caterpillar and CMCSA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and CMCSA 465 15 FEB 33, you can compare the effects of market volatilities on Caterpillar and CMCSA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Caterpillar with a short position of CMCSA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and CMCSA.

Diversification Opportunities for Caterpillar and CMCSA

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Caterpillar and CMCSA is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and CMCSA 465 15 FEB 33 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMCSA 465 15 and Caterpillar is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Caterpillar are associated (or correlated) with CMCSA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMCSA 465 15 has no effect on the direction of Caterpillar i.e., Caterpillar and CMCSA go up and down completely randomly.

Pair Corralation between Caterpillar and CMCSA

Considering the 90-day investment horizon Caterpillar is expected to under-perform the CMCSA. In addition to that, Caterpillar is 1.57 times more volatile than CMCSA 465 15 FEB 33. It trades about -0.45 of its total potential returns per unit of risk. CMCSA 465 15 FEB 33 is currently generating about 0.26 per unit of volatility. If you would invest  9,667  in CMCSA 465 15 FEB 33 on November 28, 2024 and sell it today you would earn a total of  530.00  from holding CMCSA 465 15 FEB 33 or generate 5.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Caterpillar  vs.  CMCSA 465 15 FEB 33

 Performance 
       Timeline  
Caterpillar 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Caterpillar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
CMCSA 465 15 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in CMCSA 465 15 FEB 33 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CMCSA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Caterpillar and CMCSA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Caterpillar and CMCSA

The main advantage of trading using opposite Caterpillar and CMCSA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, CMCSA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CMCSA will offset losses from the drop in CMCSA's long position.
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The idea behind Caterpillar and CMCSA 465 15 FEB 33 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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